New statistics from the U.S. Bureau of Economic Analysis shows that consumers’ mortgage debt has tumbled nearly $100 billion over the last year, according to a report from USA Today. This amount is about equal with a year’s worth of nationwide unemployment benefits, or the cost of the new Social Security payroll tax cut.
The reason for the declines largely hinges on two factors, which have contributed to it equally, the report said. First is the continued drops in interest rates seen at the end of last year, as APRs on all home loans neared all-time lows and encouraged more consumers to refinance their existing loans. The second is the number of defaults that led to foreclosures, rates for which are still unusually high.
“No one remained untouched, not homeowners, Wall Street, investors or the government,” economist Sam Khater of real estate trend tracker CoreLogic told the newspaper. “One positive sign is that housing is becoming more affordable.”
However, refinance rates have slowed largely in the new year as the average national interest rate for 30-year fixed-rate home loans has crept back toward and even above 5 percent in recent weeks.year fixed-rate home loans has crept back toward and even above 5 percent in recent weeks.